OIL
Oil prices softened at the start of a week of important central bank decisions. The price of the barrel has now recovered most of the losses caused by last week’s release of disappointing Chinese GDP data. Since then, traders have focused on reports that Beijing is planning to deploy substantial stimulus measures, which will likely fire up the country’s economy and drive greater demand for crude in the global markets. Against this background, and with the Saudi Arabian and Russian output cuts supporting the price of Brent above the $80 per barrel mark, this week’s monetary policy decisions could trigger further gains. The ECB and the Fed are expected to hike rates, but they may also issue guidance hinting at the end of the current tightening cycles. Should this scenario be confirmed, economic optimism will grow, and so will expectations for future oil demand, in a dynamic that could drive further rises in the price of the barrel.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares fluctuated at the start of what is expected to be one of the busiest weeks for investors, as earning reports continue to roll while the next Federal Reserve meeting looms.
Most benchmarks slid shortly after the opening bell, as market sentiment has been weighed down by both rising political uncertainty from Spain following a mixed outcome in the general election and disappointing PMI data from France and Germany this morning.
The IBEX-35 index from Madrid unsurprisingly brings the worst performance of the Eurozone, weighed down by consumer cyclicals and financial shares. At the same time, a sharp rebound from tech and real estate stocks has prevented the market from dipping much lower so far.
Bull traders have managed to defend support levels on the STOXX-50 index, as investors probably still await crucial macro developments this week before adjusting their exposure to risky assets. In addition to the corporate results, all eyes are on this week’s Fed meeting, where traders will assess the likelihood of further interest rates and their impact on the economy.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader